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2014 Supreme(Ker) 307
High Court of Kerala
K.M. JOSEPH & A.K. JAYASANKARAN NAMBIAR, JJ.
M/s. Trichur Auto Spares represented by A.V. Ulahannan, Partner
Versus
State of Kerala represented by its Secretary
OT. Rev. No. 127 of 2013
Decided on : 10-06-2014
For the Petitioner:Harisankar V. Menon, Meera V. Menon, Advocates.
For the Respondent: Sudheesh Kumar, Sr. Government Pleader.
Headnote:
Kerala Value Added Tax Act 2003 - Sections 55, 74 - Compounding - benefit of - Appeal - Recourse to - Findings of - Held, It is clear from a reading of S.74 that an assessee who opts for the benefit of the said provision, accepts the commission of the offence alleged to have been committed by it. Once it does that, the competent authority proceeds to determine the compounding fee payable by the assessee in accordance with clause (a) or (b) of sub-section (1) of the said Section - Court feel that in such a situation, it will not be open to an assessee who opts for compounding under the said Section, and thereby avoids adjudication proceedings for penalty and prosecution under the Act, to turn around and contest the order of the competent authority accepting its application for compounding the offence - Cases of patent mistakes in the quantification of the compounding fee payable, for an assessee to contest the order of the competent authority in an appeal under S.55 of the Act but that recourse can be had only in cases where the mistake is one that is relatable solely to the quantification of the compounding fee and does not militate against the admission by the assessee of its having committed the offence alleged against it.
A.K. Jayasankaran Nambiar, J.
1. This OT Revision is filed challenging the order dated 26.03.2013 of the Kerala Value Added Tax Appellate Tribunal. The brief facts necessary for the disposal of the Revision petition are as follows;
The petitioner is an assessee for the purposes of the Kerala Value Added Tax Act (hereinafter referred to as the 'Act') and is engaged in the trading of automobile spare parts. The places of business of the petitioner were inspected by the Intelligence Wing of the Commercial Taxes department on 26.11.2009 and, on the basis of details gathered during the said inspection, penalty proceedings were proposed to be initiated against the petitioner for contravention of Section 40 of the Act read with Section 71 thereof dealing with failure to keep true and complete accounts. The proceedings initiated were in respect of the following offences that were alleged to have been committed by the petitioner viz.
(i) non-declaration by the petitioner of two godowns maintained by it;
(ii) variation in stock valued at Rs.8294/- with a tax effect of Rs.1037/-; and
(iii) unaccounted sales worth Rs.32,823/- with a tax effect of Rs. 4103/-.
2. The petitioner chose to have the offences compounded in terms of Section 74 of the Act and accordingly preferred Annexure-A application before the Intelligence officer who proceeded to accept the application and determine the tax payable as Rs.1,52,000/- and the compounding fee payable as Rs.1,52,000/-. The order of the Intelligence Officer is produced as Annexure-B.
3. On receipt of Annexure-B order, the petitioner preferred an appeal against the said order before the appellate authority who, vide Annexure-C order, considered the matter on merits and rejected the appeal. Aggrieved by the order of the first appellate authority, the petitioner preferred a further appeal before the Appellate Tribunal which rejected the appeal on the finding that, insofar as the petitioner had compounded the offence under Section 74 of the Act, it could not have challenged the order permitting the compounding of the offence by invoking Section 55 of the Act. The Tribunal also placed reliance on the decision of this court in Sreesastha Trading Company v State of Kerala and Others – 1992 (1) KTR 74. It is the said order of the Appellate Tribunal that is impugned in these proceedings before us.
4. We have heard Adv.Sri.Harisankar Menon, learned counsel appearing on behalf of the petitioner as also Sri.Sudheesh Kumar, learned Government Pleader appearing on behalf of the State Government. Learned counsel for the petitioner would contend that the Appellate Tribunal erred in not considering the appeal preferred by it on merits. He would point out that the provisions of Section 55 of the Act clearly provide for an appeal to the first appellate authority against any order issued or proceedings recorded under the Act other than those that are expressly excluded under that provision. Since it is not in dispute that an order passed under Section 74 of the Act is not expressly excluded by Section 55, the first appellate authority was legally justified in entertaining the appeal and passing orders on merits. It is his contention that insofar as the assessee was agitating the issue regarding correctness of the quantification of compounding fee by the Intelligence Officer, it was not a case where the assessee was turning around and reneging from its offer to compound the offence and hence the decision in the Sreesastha Trading Company case (Supra), relied upon by the Appellate Tribunal, did not apply on the facts of the instant case. It is his further contention that the Appellate Tribunal ought to have considered the issue on merits and found that the quantification of compounding fee done by the Intelligence Officer was incorrect. This was because, the specific case of the assessee was that it had accounted the entire turnover, relating to the goods stored in the undeclared godowns, in its books of
